inspections/regulations aren't the cost center here. the big guys (a 4 company cartel) get to use literal slave labor to do the butchering, processing, and packing.
meanwhile a local farm has to hire a local butcher.
meanwhile a local farm has to hire a local butcher.
That depends. If you're selling the meat openly, it has to go through a USDA inspected facility. Most local butchers are not USDA inspected. The alternative is the sell "the animal". This typically means the customer buys the animal, the farmer takes it to the butcher of your choice, then you pay the butcher.
The butchering is the expensive part no matter what, but the individual farms can't compete with the assembly line style processing of the the giants to sell the meat directly. So they're only competitive on the meat price with the customer using a local butcher. Local butchers don't have the scale to be cheap, so the customer has to do the work if they want to save any money.
All that said, there's still a cost issue. The small producers just don't have the scale. They often treat their animals better too. I can get local pork for $1.80 hanging weight, plus a $30 processing fee on a half or whole hog. That's close to store prices for the raw cuts (shoulder, loin, etc). You really only get into the money savings if you cure your own bacon, corn your own ham, make your own sausage, etc. But most people aren't willing to do that level of work to save almost nothing. I do it because it's usually a superior product, I'm supporting local, and I know how my meat was raised.
If this is truly the case then there is a large reckoning coming for everyone who currently benefits from this. That includes consumers. It just seems impossible for the current arrangement to last.
That reckoning may yet come but nobody expects it any time soon.